Hungary awarded a contract today worth nearly USD 14 billion for Russia's atomic energy corporation to more than double production at the EU nation's only nuclear power plant.
The inter-governmental agreement signed after talks between Hungary's visiting Prime Minister Viktor Orban and Russian President Vladimir Putin is likely to draw criticism both at home and from EU officials because it came without a formal bidding process.
"We value the progress achieved by your leadership," the conservative Hungarian premier told the Russian leader.
"In the area of trade, our progress is unparallelled, and the signature of these documents should serve as another step in this direction," the Interfax news agency quoted Orban as saying.
The deal also comes amid increasing concern in several eastern European countries and Brussels about undue reliance for energy on Russia, which enjoys a dominant position in providing natural gas to a number of states.
Putin for his part said the deal would help "improve Hungary's energy independence and help solve issues associated with energy security."
The head of Russia's Rosatom state atomic energy corporation said Moscow would provide Budapest with a loan of up to USD 13.7 billion for Hungary to boost production at its Paks facility to 4,400 MW from 2,000 MW.
"The loan's agreement between our finance ministries is now in its closing stages," the Prime business news agency quoted Rosatom chief Sergei Kiriyenko as saying.
The Paks plant -- located about 100 kilometres south of Budapest -- is responsible for producing 40 per cent of the energy consumed in the former member of the now-defunct Soviet-led Warsaw Pact.
The facility is operated by Hungary's state-owned MVM -- a group that also imports natural gas from Russian energy giant Gazprom and would like to negotiate a price cut.
The Hungarian parliament approved a decision in 2009 to add two more reactors to the four already running at the site.
France's Areva and US electric company Westinghouse along with Japanese and South Korean power suppliers had previously expressed interest in bidding for a contract of the Hungarian plant's expansion.
But Hungary's Nepszabadsag daily reported that Russia's Rosatom was the only potential bidder willing to offer pre-financing.
It added that total investments of USD 18.2 billion would make it by far the biggest project assumed by Hungary since it joined the European Union in 2004.
